The proposed research will analyze the effects of cost control incentives on physician decision-making in a capitation payment based IPA-HMO. While previous research on the performance of prepaid group practice has generally substantiated its effectiveness in reducing health care costs, there is little emperical evidence on the performance of IPAs. The small amount of evidence available tends to cast doubt on the ability of these organizations to substantially reduce the costs of health care, but provides little guidance to health planners who will be making decisions on whether this form of health care plan should be supported. The organization to be studied in the proposed research--the Health Maintenance Organization of Pennsylvania--differs from Foundations for Medical Care and most other IPAs in that primary physicians are remunerated on a capitation basis. It may, therefore, offer a model for delivering cost-effective health care while avoiding some of the perceived disadvantages of prepaid group practice models. Using existing data which are collected by the HMOPA for financial management and quality assurance purposes, the proposed research will identify the effects of the capitation payment--and other organizational incentives to control costs--on the behavior of physicians who are members of the IPA. The research will examine the effects of the cost control incentives on the process of medical care as well as evaluating the overall performance of this type of organization.